The Coronavirus is expected to generate a 1.5% contraction in the economy of Costa Rica in 2020. This is predicted by the risk rating agency Standard and Poor’s. The agency projects that the fiscal deficit will be 8% of the GDP this year.
It keeps Costa Rica rated B+ with a negative outlook and the risk of a downgrade in the next 12 months. Further deterioration in public finances is to be expected. The S&P pointed out the lack of “correct, conscious and timely” commitment of the Costa Rican political sector to reverse the fiscal deficit.
The US agency stated, “This reflects a strong blow to domestic demand amid measures to combat covid-19 and a drop in tourism and goods exports due to the economic contraction in trading partners.”
S&P expects foreign investment to be equivalent to 3.5% of GDP in areas of life sciences, digital technology and services. The agency also forecasts that production will rebound in 2021. It estimates 3.7% of GDP in 2021 and 3% by 2022.
Moody’s also warned of the economic effect generated by the virus. It stated that while the country approved laws and proposals to mitigate adversities, they will help in some ways but on the other hand put negative pressure on the fiscal profile.